JP Morgan Chase & Co (JPM)

Likes U.S. financials a lot. Good earnings last year. It's a smart play on rising interest rates. They have a great CEO who believes the US consumer and economy are healthy. Its valuation is at 12x earnings and boasts better earnings growth than Canadian banks. He sees this hitting $150.

She sold Wells Fargo and bought this in February. It's a good play on the U.S. economy, well-run and reasonably valued. The U.S. economy will continue to imrpove.

He likes a couple of ETFs. KRE-N is regional banks and has broken out already. While revenues go up revenues should increase for banks but the profit margin is worse if the yield curve is flattening. There is a momentum trade on US banks right now, however. The yield curve could flatten further later this year.

It is in good shape fundamentally with a PE around 13. We have not broken down below its channel.

JP Morgan (JPM-N) vs Bank of America (BAC-N) – He holds both of these companies. JP Morgan (JPM-N) is a preferred holding for him as its earnings are less volatile of the two. Bank of America (BAC-N) is second on his list, which carries a large amount of “free balances” (client deposits they pay no interest on), which is very interest rate sensitive.

He thinks they are the best positioned financial institution and is well diversified. The can perform many types of lending and loans. It has a large presence in Europe and is very competitive. He prefers them over European banks. Yield 1.9%. (Analysts’ price target is $120.08 )

As the heart of the pro-growth theme. He likes the banking sector in the US. Earnings for this company are fantastic. Good boring name. (Analysts’ price target is $119.98)

Strong in investment banking, trading and primarily retail banking. Like Bank of America, they will be returning capital to shareholders through buybacks. Will benefit from rising interest rates. (Analysts' price target is $119.98.)

This is a well-managed, large US bank that is well-valued at this level. They expect it to grow with the rapid (3%) growth of the US economy. She thinks they can grow its market share. (Analysts' price target is 119.98$).

Just reported today, and the numbers were very strong. That speaks to the strength in the US economy and their ability to continue to grow earnings. Hopefully, higher rates in 2018 will bode well for them. Their corporate investing was very strong. Pays a nice 2.5% dividend. Prefers Bank of America (BAC-N), but if you own this, that's a great call.

He loves US banks in general. The outlook for US financials for 2018 is that there are a lot of positive things happening. Rising interest rates are very good for banks and their net interest margins. Deregulation is going to alleviate some of the cost pressures. Also, it looks like tax reform is getting to be a closer reality. This is trading at only 13-14 times earnings. You get paid a nice dividend, and they are buying back shares.

Sell and move into Bank of America (BAC-N)? Both are a play on the US economy and capital markets. Of the 2, she would tend to stick with J.P. Morgan, which she feels has a better management team in place. Both will participate if markets continue to do well.

Banks are taking a breather now. The spread between 2 year and 10 year yields are very, very low. Because of this, the yield curve has flattened, which isn’t an environment where banks do well. However, these are very, very healthy companies. Thinks the banks are a good choice.

Their revenues are highly tied to interest rates and since we only expect 1 increase in December and 3 next year she is only looking at 7% earnings growth next year. She prefers BAC-N, which she owns.

It is an excellent vertically integrated financial services company: capital markets, retail banking and wealth management well. The valuation is on the higher end today but is a good long term hold. He would be more interested at 10 times earnings.